China-based US firms see red over data theft

BEIJING — A quarter of firms that are members of a leading US business lobby in China have been victims of data theft, a report by the group said on Friday, amid growing vitriol between Beijing and Washington over the threat of cyber attacks.

Reuters

Twenty-six percent of members who responded to an annual survey said their proprietary data or trade secrets had been compromised or stolen from their China operations, the American Chamber of Commerce in China report said.

“This poses a substantial obstacle for business in China, especially when considered alongside the concerns over Intellectual Property Rights (IPR) enforcement and de-facto technology transfer requirements,” the Chamber said.

A US computer security company, Mandiant, said in February a secretive Chinese military unit was likely behind a series of hacking attacks that targeted the US and stole data from more than 100 companies.

That set off a war of words between Washington and Beijing.
US representative Dutch Ruppersberger said last month American companies suffered estimated losses in 2012 of more than US$300 billion due to trade secret theft, much of it the result of Chinese hacking.

China says the accusations lack proof and that it is also a victim of hacking attacks, more than half of which originate from the US.

The Chamber’s survey was conducted among 325 members across China late last year, before the release of Mandiant’s report.

Only 10% of companies in the survey said they would use China-based cloud computing services, with most citing cyber security concerns as a reason. Blocked internet searches in China had impeded business for 62% of respondents.

US officials have pressed China to address internet attacks and cyber spying against American companies. US President Barack Obama raised hacking concerns in a phone call with Chinese President Xi Jinping earlier in March.

A recent assessment by US intelligence leaders said for the first time cyber attacks and cyber espionage had supplanted terrorism as the nation’s top threat.

Most firms expressed optimism about the business outlook in China, with many reporting higher margins for their China units.

But companies gave lower expectations for investment and cited rising labour costs as a top concern. Perceptions that China’s investment environment is stagnating are increasing, according to the survey.

“Members have not felt over the last four or five years that there have been commercially significant positive changes in the business environment or the investment environment,” Chamber president Christian Murck told reporters.

Perceptions that technology transfer was increasingly a requirement for access to China’s market also jumped 10 points to 37%, the Chamber said, with higher rates of concern reported in the aerospace, automotive, chemical in information technology sectors.